IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-11019

JACKED UP, L.L.C., 

 Plaintiff–Appellant, 

v. 

SARA LEE CORPORATION; THE J.M. SMUCKER COMPANY, 

 Defendants–Appellees. 

JACKED UP, L.L.C., 

 

 Plaintiff–Appellant, 

v. 

THE J.M. SMUCKER COMPANY, 

 Defendant–Appellee. 

Appeals from the United States District Court 

for the Northern District of Texas 

Before PRADO, HIGGINSON, and COSTA, Circuit Judges. 

EDWARD C. PRADO, Circuit Judge:

In September 2011, Jacked Up, L.L.C. (“Jacked Up”) and Sara Lee 

Corporation (“Sara Lee”) signed a licensing agreement whereby Sara Lee 

would produce and sell energy drinks developed by Jacked Up. Shortly 

thereafter, Sara Lee sold its beverage division to the J.M. Smucker Company 

United States Court of Appeals

Fifth Circuit

FILED

April 25, 2017

Lyle W. Cayce

Clerk

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2 

(“Smucker”). Smucker decided not to assume Sara Lee’s licensing agreement 

with Jacked Up, and in November 2011, Sara Lee formally terminated the 

agreement. Jacked Up brought suit against Sara Lee, alleging breach of 

contract, breach of fiduciary duty, fraud, and fraudulent inducement. Jacked 

Up joined claims against Smucker for, among others, tortious interference with 

a contract and trade secret misappropriation. The district court granted 

summary judgment against Jacked Up on all claims. We AFFIRM in part, 

REVERSE in part, and REMAND for further proceedings. 

I. FACTUAL AND PROCEDURAL BACKGROUND 

In 2011, Jacked Up was a small start-up company that sold energy shots 

to convenience stores. Sara Lee was a large corporation with multiple wellestablished food and beverage brands. Jacked Up’s founder and sole owner, Joe 

Schmitz, met some Sara Lee employees at a trade show in early 2011. Schmitz 

and the Sara Lee employees discussed creating a Jacked Up line of dispensed 

teas, coffees, and cappuccinos.1 Sara Lee already had an “Infusia” line of 

vitamin-infused teas under the Pickwick brand, but these teas were not 

marketed as energy drinks and did not sell well. Sara Lee saw a Jacked Up 

line of beverages as an opportunity to enter the energy drink market and 

“pioneer a brand new dispensed energy beverage category.” 

After several months of negotiations and product development, Jacked 

Up agreed to license its brand name and proprietary energy ingredients to Sara 

Lee in exchange for royalties. Under the terms of the licensing agreement, 

Jacked Up would sell its energy ingredients to Sara Lee and Sara Lee would 

then manufacture and sell Jacked Up products. The parties agreed to share 

marketing costs. In addition, the agreement called for market testing. The 

initial term of the licensing agreement was five years, followed by a three-year 

 

1 “Dispensed” means that the beverage is distributed using stand-alone equipment 

rather than through a fountain machine or in bottles or cans. 

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renewal term. However, the licensing agreement featured a number of 

termination clauses triggered by various events and dates. 

One termination provision, Section 14(b), gave either party “the right to 

terminate this Agreement if it provides written notice to the other party no 

later than 60 days prior to any anniversary of the Effective Date.” Sara Lee 

proposed adding this termination provision while the parties were finalizing 

the agreement. In an email, Sara Lee referred to this provision as an “annual 

Termination clause” affording both parties “the ability to terminate if strategy 

changes or market conditions shift, etc.” Jacked Up accepted the added 

provision, describing it as “adding limited right for either party to terminate 

at anniversary dates of agreement.” 

During negotiations, Sara Lee also requested a change-of-control 

termination provision (Section 14(c)). In an email, Sara Lee director of 

marketing Greg Immell explained that Sara Lee wanted this provision “in the 

event North American Beverage2 is purchased by a third party company.” 

Schmitz testified that this statement led him to question Sara Lee “executives 

Mr. Drake and Mr. Immell about any intent to sell the North American 

Beverage [Division].” According to Schmitz, these executives represented that 

Sara Lee “had no intent to sell the business and that it was not discussing any 

sale to any third party. They also represented that [Schmitz] did not need to 

be concerned as under no circumstance would [Sara Lee sell] the business and 

not include the License Agreement as part of the deal.” Jacked Up and Sara 

Lee finalized the licensing agreement around September 28, 2011, with an 

effective date of October 1, 2011. 

In early October 2011, shortly after the licensing agreement went into 

effect, Sara Lee displayed Jacked Up products at a convenience store trade 

 

2 This division was one of several under the Sara Lee corporate umbrella at the time. 

Jacked Up dealt primarily with employees of this division. 

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show. According to Schmitz, a Sara Lee worker at the show told him about an 

impending sale of the company. Schmitz testified that he again asked Sara Lee 

executives—Immell and director of sales Jim Whitaker—whether Sara Lee 

was planning a sale. The executives, according to Schmitz, again represented 

that Sara Lee was not selling its business. 

On October 24, 2011, Sara Lee publicly announced the sale of its North 

American Beverage Division to Smucker; this sale closed in early 2012. 

According to Schmitz, Sara Lee asked him to participate in a telephone call 

around October 21, 2011.3 On that call, according to Schmitz, Immell 

stated that [Sara Lee] was selling its coffee business to Smuckers, 

that the License Agreement would not be part of the [sale] to 

Smuckers, that [Sara Lee] was terminating the License Agreement 

immediately at Smuckers’ request, that [Sara Lee] would no longer 

perform any obligations under the agreement, and that [Sara Lee] 

was discontinuing the Jacked Up Energy Iced Teas, Coffees, and 

Cappuccinos. 

Schmitz testified that had he known of Sara Lee’s impending sale to Smucker, 

he would not have signed the agreement and would not have launched Jacked 

Up products at the convenience store trade show.

Immell recounted the late October telephone call somewhat differently. 

According to Immell, he did tell Schmitz that Smucker would not assume the 

licensing agreement.4 But he also indicated that “Sara Lee was interested in 

pushing forward with the proposed dispensed energy iced tea product pursuant 

to the License Agreement, including by pursuing the required market testing 

to see how a Jacked Up branded dispensed energy iced tea would fare in the 

marketplace.” Schmitz refused to move forward with market testing, however. 

 

3 In an earlier declaration, Schmitz stated that this conversation took place on October 

26, 2011. 

4 An internal Smucker email dated October 28, 2011, confirms that Smucker did not 

plan to assume Sara Lee’s contract with Jacked Up. 

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Thus, according to Immell’s account, it was Jacked Up that violated the 

agreement first. 

In any event, the deal quickly broke down. An internal Sara Lee email 

dated October 26, 2011, suggests that Sara Lee had told Jacked Up by then 

that the licensing agreement would not come to fruition. An email from Sara 

Lee to Schmitz on November 4, 2011, further states that “Jacked Up Energy 

Tea is not part of [the] sale and will be discontinued.” Sara Lee formally 

terminated the licensing agreement by letter on November 18, 2011. 

As quickly as the licensing agreement broke down, it wound up in court. 

Jacked Up brought a breach of contract claim against Sara Lee in Texas state 

court on November 7, 2011—before Sara Lee even sent its formal termination 

letter. After Sara Lee removed the case to federal court, Jacked Up added 

Smucker as a defendant, claiming that Smucker tortiously interfered with the 

licensing agreement. Jacked Up later added claims for breach of fiduciary duty, 

fraud, and fraudulent inducement against Sara Lee, as well as a claim for 

common law trade secret misappropriation against Smucker. Jacked Up based 

this trade secret claim on the allegation that Smucker has used Jacked Up 

formulas in its Pickwick-brand iced teas (a brand it purchased from Sara Lee). 

After discovery, all three parties moved for summary judgment. In 

connection with these motions, the parties moved to strike certain summary

judgment evidence. Jacked Up also requested a continuance pursuant to 

Federal Rule of Civil Procedure 56(d) in response to Smucker’s summary 

judgment motion, claiming that Smucker had not yet revealed what formula it 

was using in its teas. The district court granted Sara Lee’s and Smucker’s 

motions for summary judgment on various grounds, denied the motions to 

strike as moot, and denied Jacked Up’s 56(d) request for a continuance. The 

district court entered judgment in favor of Sara Lee and Smucker on June 4, 

2015. This appeal followed. 

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II. JURISDICTION AND STANDARD OF REVIEW 

Jacked Up is a limited liability company whose sole member—Joe 

Schmitz—is a Texas citizen. Sara Lee is a Maryland corporation with its 

principal place of business in Illinois. Smucker is an Ohio corporation with its 

principal place of business in Ohio. Therefore, the district court had diversity 

jurisdiction under 28 U.S.C. § 1332. This Court has appellate jurisdiction 

under 28 U.S.C. § 1291. 

We review de novo a district court’s grant of summary judgment. Sierra 

Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d 546, 562 (5th Cir. 

1996). The Court must view “the facts and inferences . . . in the light most 

favorable to the nonmoving party.” Id. at 562–63. Summary judgment is 

appropriate “if the movant shows that there is no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law.” Fed. 

R. Civ. P. 56(a). A genuine dispute of material fact exists if the “evidence is 

such that a reasonable jury could return a verdict for the nonmoving party.” 

Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 400 (5th Cir. 2013) 

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

Additionally, this Court reviews for abuse of discretion a district court’s denial 

of a Rule 56(d) motion for a continuance. Am. Family Life Assurance Co. of 

Columbus v. Biles, 714 F.3d 887, 894 (5th Cir. 2013). 

III. DISCUSSION 

On appeal, Jacked Up argues that issues of fact preclude summary 

judgment on its breach of contract, breach of fiduciary duty, fraud, and 

fraudulent inducement claims against Sara Lee, as well as its tortious 

interference and trade secret claims against Smucker. 

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A. Claims Against Sara Lee 

1. Breach of Contract 

The district court concluded that Sara Lee terminated the contract in 

accordance with Section 14(b)’s plain language. Jacked Up challenges the 

district court’s interpretation of Section 14(b), insisting that this provision is 

ambiguous. In response, Sara Lee defends the district court’s interpretation of 

Section 14(b), and further argues that even if the district court misinterpreted 

this termination provision, Jacked Up fails to establish a breach of contract 

claim. 

a. Whether the district court misinterpreted the contract 

The contractual provision at issue in this case is Section 14(b) of the 

licensing agreement, which states: “Either party shall have the right to 

terminate this Agreement if it provides written notice to the other party no 

later than 60 days prior to any anniversary of the Effective Date.” The district 

court found this provision unambiguous. According to the district court, 

Section 14(b) permits at-will termination during a “10-month window every 

year.” Because Sara Lee terminated the licensing agreement during one such 

window—i.e., more than 60 days before the first anniversary date—the court 

held that Sara Lee did not breach the contract. 

Jacked Up provides two alternative interpretations of Section 14(b). In 

its principal brief on appeal, Jacked Up argues that the word “anniversary” in 

Section 14(b) means the end of the initial five-year term and the end of the 

subsequent three-year renewal term. Jacked Up also offered this 

interpretation before the district court. In its reply brief, Jacked Up argues 

that Section 14(b) creates an annual right to opt out of the contract.5 In other 

 

5 Jacked Up did briefly refer to this interpretation in its principal brief on appeal:

Barring an interpretation, which Sara Lee never advanced in the District 

Court, that the clause was intended to provide for an annual right for unilateral 

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words, “if a party gives notice 60 days prior to the anniversary of the Effective 

Date, the License Agreement terminates at the end of that calendar year. If 

neither party gives notice 60 days prior to the anniversary of the Effective 

Date, the License Agreement extends to another year.” 

The parties agree that Illinois law controls the breach of contract claim. 

Under Illinois law, “[t]he primary objective in construing a contract is to give 

effect to the intent of the parties.” Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 

2007). A contract “is to be construed as a whole, giving effect to every provision, 

if possible.” Cent. Ill. Light Co. v. Home Ins. Co., 821 N.E.2d 206, 213 (Ill. 2004). 

If words in the contract “are clear and unambiguous, they must be given their 

plain, ordinary, and popular meaning.” Id. “But if the contract is ambiguous, 

‘its construction is then a question of fact, and parol evidence is admissible to 

explain and ascertain what the parties intended.’” Curia v. Nelson, 587 F.3d 

824, 829 (7th Cir. 2009) (quoting Farm Credit Bank of St. Louis v. Whitlock, 

581 N.E.2d 664, 667 (Ill. 1991)). Contractual language is ambiguous if it “is 

susceptible to more than one meaning.” Gallagher, 874 N.E.2d at 58. Whether 

a contract is ambiguous is a question of law. Quake Constr., Inc. v. Am. 

Airlines, Inc., 565 N.E.2d 990, 994 (Ill. 1990). 

As an initial matter, the first interpretation offered by Jacked Up—that 

Section 14(b) only permits termination at the ends of the initial and renewal 

terms—is unreasonable. This interpretation ignores the clear and 

unambiguous meaning of “anniversary”: “the yearly recurrence of the date of a 

past event.” Anniversary, Random House Webster’s Unabridged Dictionary (2d 

ed. 2001) (emphasis added). Thus, Section 14(b) unambiguously provides an 

annual right of termination. 

 

termination without cause, the only other “anniversaries” in the Licensing 

Agreement are those described in the testimony of Jacked Up’s principal, Mr. 

Schmitz.

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The real interpretive question in this case is when termination is 

effective. Sara Lee argues, and the district court held, that termination under 

Section 14(b) is effective immediately. Jacked Up’s second interpretation, by 

contrast, implies that termination is effective at the end of the year.6 Both 

interpretations have some merit.

The plain language of Section 14(b) favors Sara Lee’s interpretation. 

Section 14(b) simply affords each party “the right to terminate . . . if it provides 

written notice.” The provision does not state that termination is effective at 

some later date. The provision could have been written differently; for example, 

Section 14(b) could read: 

Either party hereto may terminate this Agreement as of the 

anniversary date of this Agreement in any year by mailing written 

notice of its election to do so to the other party sixty (60) or more 

days before the effective date of such termination. 

Rockwell Eng’g Co. v. Automatic Timing & Controls Co., 559 F.2d 460, 462 (7th 

Cir. 1977) (emphasis added); see also Int’l Adm’rs, Inc. v. Life Ins. Co. of N. 

Am., 753 F.2d 1373, 1382 (7th Cir. 1985) (“Either the Policyholder or the 

Company may terminate this policy on the first or any subsequent anniversary 

of the date of issue by written notice mailed or delivered to the other at least 

30 days prior to the effective date of termination.”). In the absence of such 

language, it is reasonable to read Section 14(b) as permitting termination as 

soon as one party provides written notice to the other. 

But Sara Lee’s interpretation has drawbacks. First, a provision that 

permits at-will termination ten months out of the year but not during the 60 

days prior to October 1 makes little business sense. See Bd. of Educ. of 

Waukegan Cmty. Unit Sch. Dist. No. 60 v. Orbach, 991 N.E.2d 851, 857 (Ill. 

App. Ct. 2013) (explaining that “a contract should be construed to avoid absurd 

 

6 This could mean at the end of the calendar year, as Jacked Up suggests, or on the 

anniversary date, October 1.

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results”). Second, reading the contract as providing at-will termination would

largely nullify the contract’s other termination provisions in Sections 7 and 14. 

See Thompson v. Gordon, 948 N.E.2d 39, 47 (Ill. 2011) (“A court will not 

interpret a contract in a manner that would nullify or render provisions 

meaningless . . . .”). These other provisions permit termination upon 30, 60, or 

90 days’ notice if certain events occur. But if a party can terminate immediately 

under Section 14(b), then it need not rely on these other provisions. 

Sara Lee’s weaknesses are Jacked Up’s strengths. Jacked Up’s 

interpretation makes business sense: it gives each party an annual opportunity 

to opt out of the licensing agreement and gives the other party at least 60 days 

to wind down its commitments under the agreement.7 Moreover, this limited 

interpretation does not nullify the contract’s other termination provisions. 

Indeed, Jacked Up’s interpretation accords with the plain meaning of the other 

termination provisions in the licensing agreement, all of which make 

termination effective some period of time after notice is provided. 

On balance, we find Section 14(b) ambiguous because the text is silent 

about when termination is effective. Setting aside context, Sara Lee’s 

interpretation is more natural than Jacked Up’s. But the text is not so “clear 

and unambiguous,” Cent. Ill. Light, 821 N.E.2d at 213, that we must read the 

provision as making termination effective immediately. By contrast, Jacked 

Up’s interpretation is more reasonable in context, but it does read words into 

the contract that are not present. “[C]onstru[ing] the contract as a whole [and] 

reading each term in light of the others,” Bank of Am. Nat’l Trust & Sav. Ass’n 

v. Schulson, 714 N.E.2d 20, 24 (Ill. App. Ct. 1999), Section 14(b) is susceptible 

 

7 Sara Lee itself explained the purpose of Section 14(b) in an email dated September 

26, 2011: to afford both parties “the ability to terminate if strategy changes or market 

conditions shift, etc.” This email also describes Section 14(b) as permitting “[t]ermination 

with 60 days notice.” We do not consider this parol evidence in determining whether Section 

14(b) is ambiguous, but the district court may consider it on remand.

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to both Sara Lee’s and Jacked Up’s interpretations. Accordingly, Section 14(b) 

is ambiguous, “its construction is . . . a question of fact, and parol evidence is 

admissible to explain and ascertain what the parties intended.” Curia, 587 

F.3d at 829 (quoting Whitlock, 581 N.E.2d at 667). We reverse the district 

court’s conclusion that Section 14(b) unambiguously permitted Sara Lee to 

terminate the licensing agreement at will. 

b. Whether Sara Lee breached the contract 

Under Illinois law, a breach of contract claim requires “evidence of 

(1) the existence of a contract; (2) [the plaintiff’s] performance under the 

contract; (3) the defendants’ breach; and (4) resulting injury from the breach.” 

Burrell v. City of Mattoon, 378 F.3d 642, 651 (7th Cir. 2004). Because the 

district court interpreted Section 14(b) as permitting at-will termination, it 

held that Sara Lee’s termination did not breach the licensing agreement. On 

appeal, the parties dispute whether Sara Lee breached the contract even if the 

district court’s interpretation is incorrect. The parties appear to agree that the 

licensing agreement was a valid contract, but Sara Lee contests the other three 

elements of Jacked Up’s breach of contract claim.8 First, Sara Lee argues that 

it did not breach the contract prior to its formal termination on November 18, 

2011. Second, Sara Lee argues that Jacked Up failed to perform its end of the 

contract by refusing to conduct market testing. In response, Jacked Up argues 

that Sara Lee repudiated first, thereby relieving Jacked Up of any further 

duties under the contract. 

Both parties can point to evidence in the record supporting their 

respective positions on who repudiated first. Specifically, both parties cite to 

contrasting accounts of a telephone conversation in late October 2011. 

According to Sara Lee’s Greg Immell, he told Schmitz during that conversation 

 

8 We discuss Jacked Up’s performance and Sara Lee’s breach here, and damages in 

Part III.C below.

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that “Sara Lee was interested in pushing forward with the proposed dispensed 

energy iced tea product pursuant to the License Agreement.” By contrast, 

according to Schmitz, Immell represented that Sara Lee “was terminating the 

License Agreement immediately at Smuckers’ request.” Schmitz’s account is 

corroborated by an internal Sara Lee email dated October 26, 2011, suggesting 

that Immell had told Schmitz that the licensing agreement would be 

terminated and that Schmitz “was not too happy.” 

If the district court’s interpretation of Section 14(b) is incorrect, and Sara 

Lee did “manifest[] a clear, unequivocal intent not to perform under the 

contract when performance [was] due,” then it anticipatorily breached the 

contract. Arlington LF, LLC v. Arlington Hosp., Inc., 637 F.3d 706, 713 (7th 

Cir. 2011). But if Sara Lee did not repudiate the agreement and Schmitz 

refused to conduct market testing, then Jacked Up failed to perform. Because 

evidence in the record supports both positions, there are genuine disputes 

about whether Sara Lee breached the contract and whether Jacked Up 

performed under the contract. Accordingly, we reverse the district court’s grant 

of summary judgment in favor of Sara Lee on Jacked Up’s breach of contract 

claim. 

2. Breach of Fiduciary Duty 

The district court granted summary judgment on Jacked Up’s breach of 

fiduciary duty claim, finding that Sara Lee did not owe any fiduciary duty to 

Jacked Up. On appeal, the parties dispute whether there is a fact issue as to 

the existence of a fiduciary relationship. See Crim Truck & Tractor Co. v. 

Navistar Int’l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992) (“The existence 

of a confidential relationship is usually a question of fact.”). Jacked Up argues 

that its “‘partner’ relationship” with Sara Lee and the non-disclosure 

agreement (“NDA”) both parties signed created a fiduciary relationship 

between them. Sara Lee argues that the parties dealt with each other at arm’s 

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length and notes that neither an NDA nor one party’s subjective trust in the 

other suffices to create fiduciary duties. Sara Lee also emphasizes that the 

licensing agreement itself disclaims a fiduciary relationship. 

Under Texas law,9 “[t]he elements of a breach of fiduciary duty claim are: 

(1) a fiduciary relationship between the plaintiff and defendant; (2) the 

defendant must have breached his fiduciary duty to the plaintiff; and (3) the 

defendant’s breach must result in injury to the plaintiff or benefit to the 

defendant.” Navigant Consulting, Inc. v. Wilkinson, 508 F.3d 277, 283 (5th Cir. 

2007) (quoting Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.—Dallas 2006, 

pet. denied)). “A fiduciary relationship may arise from formal and informal 

relationships and may be created by contract.” Lundy v. Masson, 260 S.W.3d 

482, 501 (Tex. App.—Houston [14th Dist.] 2008, no pet.). “[A] formal fiduciary 

relationship[] ‘arises as a matter of law and includes the relationships between 

attorney and client, principal and agent, partners, and joint venturers.’” 

Navigant Consulting, 508 F.3d at 283 (quoting Abetter Trucking Co. v. Arizpe, 

113 S.W.3d 503, 508 (Tex. App.—Houston [1st Dist.] 2003, no pet.)). An 

informal fiduciary relationship, however, “may arise where one person trusts 

in and relies upon another, whether the relationship is a moral, social, 

domestic, or purely personal one.” Id. (quoting Jones, 196 S.W.3d at 449). In 

other words, a fiduciary relationship “exists where a special confidence is 

reposed in another who in equity and good conscience is bound to act in good 

faith and with due regard to the interests of the one reposing confidence.” Tex. 

Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980) (quoting Lappas 

v. Barker, 375 S.W.2d 248, 251 (Ky. 1964)). 

But Texas law “does not recognize a fiduciary relationship lightly,” 

Lundy, 260 S.W.3d at 501, “especially in the commercial context,” Willis v. 

 

9 The district court held, and the parties agree, that Texas law applies to Jacked Up’s 

extra-contractual claims against Sara Lee. 

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Donnelly, 199 S.W.3d 262, 278 (Tex. 2006). “To impose an informal fiduciary 

duty in a business transaction, the special relationship of trust and confidence 

must exist prior to, and apart from, the agreement made the basis of the suit.” 

Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 288 (Tex. 

1998). 

As Sara Lee notes, licensing agreements generally do not create fiduciary 

relationships. See, e.g., Wellogix, Inc. v. Accenture, LLP, 788 F. Supp. 2d 523, 

545–46 (S.D. Tex. 2011) (finding that licensing agreement was an arm’s-length 

transaction); Hollomon v. O. Mustad & Sons (USA), Inc., 196 F. Supp. 2d 450, 

458–59 (E.D. Tex. 2002) (finding that royalty agreement did not create a 

fiduciary relationship). Neither do NDAs or other agreements requiring 

confidentiality. See, e.g., Anglo-Dutch Petroleum Int’l, Inc. v. Smith, 243 

S.W.3d 776, 782 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (“To the 

extent Smith’s position equates a confidentiality agreement to a relationship 

of trust and confidence giving rise to a fiduciary duty, he has cited, and we 

have found, no authority supporting the notion that confidentiality agreements 

can create fiduciary relationships.”); Wellogix, 788 F. Supp. 2d at 546 (finding 

that an NDA did not give rise to a fiduciary relationship). Additionally, “mere 

subjective trust alone is not enough to transform arm’s-length dealing into a 

fiduciary relationship.” Crim Truck, 823 S.W.2d at 595 (quoting Thigpen v. 

Locke, 363 S.W.2d 247, 253 (Tex. 1962)). 

Jacked Up suggests that it created a partnership with “dominant 

partner” Sara Lee. But the licensing agreement itself makes clear that it “does 

not, and shall not, be deemed to make any party hereto the agent, partner, 

joint venturer or legal representative of any other party for any purpose 

whatsoever.” Furthermore, Jacked Up fails to cite any authority for the 

proposition that a dominant party in a commercial transaction, where each 

party is represented by counsel, owes fiduciary duties to the weaker party. 

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Jacked Up also argues that “the collaborative effort to develop the 

products, the joint marketing efforts, . . . and the promises of a long-term deal 

all would permit a reasonable juror to find the existence of a fiduciary 

relationship.” Such corporate dealings do not transform an arm’s length 

transaction into a fiduciary relationship. See Wellogix, 788 F. Supp. 2d at 545 

(“The Mutual Nondisclosure Agreement, the Marketing Alliance Agreement, 

[and] the two Teaming Agreements were all agreements between Accenture 

and Wellogix to jointly exchange information with each other in order to 

develop business opportunities to which both would contribute particular 

expertise and from which both would benefit. As such, these agreements are 

‘arms-length transactions entered into for the parties’ mutual benefit, and thus 

do not establish a basis for a fiduciary relationship.’” (quoting Meyer v. Cathey, 

167 S.W.3d 327, 331 (Tex. 2005))). 

In sum, Jacked Up fails to point to sufficient evidence that would support 

finding a fiduciary relationship between the parties. Therefore, we affirm the

district court’s grant of summary judgment in favor of Sara Lee on Jacked Up’s

breach of fiduciary duty claim. 

3. Fraud and Fraudulent Inducement 

Jacked Up’s claims for fraud and fraudulent inducement both rely on a 

series of alleged misrepresentations. But the district court granted summary 

judgment in favor of Sara Lee on these two claims for different reasons. On the 

fraud claim, the district court held that Jacked Up pleaded constructive, rather 

than common law,10 fraud. Constructive fraud, like breach of fiduciary duty, 

requires the existence of a fiduciary relationship. See Hubbard v. Shankle, 138 

S.W.3d 474, 483 (Tex. App.—Fort Worth 2004, pet. denied). Because Sara Lee 

 

10 Note that courts sometimes refer to “common law” fraud as “actual” fraud. See, e.g.,

Flanary v. Mills, 150 S.W.3d 785, 795 (Tex. App.—Austin 2004, pet. denied). 

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did not owe fiduciary duties to Jacked Up, the district court granted summary 

judgment in favor of Sara Lee on the fraud claim. On the fraudulent 

inducement claim, the district court first found that several alleged 

misrepresentations contradicted the terms of the licensing agreement and 

therefore cannot support a fraudulent inducement claim as a matter of law. 

Second, the district court found that Jacked Up’s reliance on other alleged 

misrepresentations was unjustified. 

a. Whether Jacked Up pleaded common law fraud 

On appeal, Jacked Up first challenges the district court’s holding that 

Jacked Up pleaded only constructive fraud. Common law fraud and 

constructive fraud “are independent causes of action.” Phillips v. United 

Heritage Corp., 319 S.W.3d 156, 167 (Tex. App.—Waco 2010, no pet.). The 

elements of common law fraud are (1) “a material misrepresentation” that 

(2) “was false,” (3) “was either known to be false when made or was asserted 

without knowledge of its truth,” (4) “was intended to be acted upon,” (5) “was 

relied upon,” and (6) “caused injury.” Zorrilla v. Aypco Constr. II, LLC, 469 

S.W.3d 143, 153 (Tex. 2015) (quoting Formosa Plastics Corp. USA v. Presidio 

Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998)). Constructive fraud 

is “the breach of a legal or equitable duty that the law declares fraudulent 

because it violates a fiduciary relationship.” Hubbard, 138 S.W.3d at 483. 

As an initial matter, the district court did err by applying Texas state 

law on general and specific allegations. Under federal procedural law, a 

plaintiff must “give fair notice in the pleadings of all claims brought against 

the defendant.” Homoki v. Conversion Servs., Inc., 717 F.3d 388, 402 (5th Cir. 

2013). “So long as a pleading alleges facts upon which relief can be granted,” 

however, “it states a claim even if it ‘fails to categorize correctly the legal theory 

giving rise to the claim.’” Id. (quoting Dussouy v. Gulf Coast Inv. Corp., 660 

F.2d 594, 604 (5th Cir. Nov. 1981)). For example, this Court read the plaintiff’s 

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pleading of an implied warranty claim under California law as a similar claim 

under Texas law, noting that “the most natural reading of the [plaintiffs’] 

broadly-worded complaint would include some version of that claim under 

Texas law.” McManus v. Fleetwood Enters., Inc., 320 F.3d 545, 551 (5th Cir. 

2003). However, this Court has also held that “district courts do not abuse their 

discretion when they disregard claims or theories of liability not present in the 

complaint and raised first in a motion opposing summary judgment.” De 

Franceschi v. BAC Home Loans Servicing, L.P., 477 F. App’x 200, 204 (5th Cir. 

2012) (unpublished). 

Jacked Up’s fraud claim as articulated in its complaint is consistent with 

constructive fraud. Specifically, the complaint refers to Sara Lee as a trusted 

vendor and fiduciary that abused its position of trust and “violated the 

confidences bestowed upon [it].” 

But the complaint is not clearly inconsistent with common law fraud. 

The relevant section is titled “Fraud (Against SL)” and mentions “the 

Defendant’s knowing, reckless, and intentional deception.” Moreover, the 

allegations made in the fraudulent inducement section of the complaint 

support Jacked Up’s common law fraud claim. Thus, “the most natural reading 

of [Jacked Up’s] broadly-worded complaint would include” common law fraud. 

McManus, 320 F.3d at 551. In addition, Jacked Up’s fraud and fraudulent 

inducement arguments are essentially identical both on appeal and in the 

summary judgment briefing. Given the ambiguity in Jacked Up’s complaint 

and the similarities between Jacked Up’s fraud and fraudulent inducement

arguments, we find that Jacked Up gave “fair notice in the pleadings of all 

claims brought against the defendant.” Homoki, 717 F.3d at 402. Therefore, 

the district court erred in granting summary judgment on Jacked Up’s fraud 

claim on this ground. 

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b. Whether Jacked Up’s reliance on Sara Lee’s representations 

was justified 

Jacked Up next argues that genuine issues of material fact preclude 

summary judgment on its fraud and fraudulent inducement claims. Sara Lee 

contends, as the district court held, that Jacked Up’s reliance on Sara Lee’s 

alleged misrepresentations was not justifiable. 

“The issue of justifiable reliance is generally a question of fact.” Prize 

Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 584 (Tex. App.—San 

Antonio 2011, no pet.). But “[i]t is well-established that ‘[t]he recipient of a 

fraudulent misrepresentation is not justified in relying upon its truth if he 

knows that it is false or its falsity is obvious to him.’” Nat’l Prop. Holdings, L.P. 

v. Westergren, 453 S.W.3d 419, 424 (Tex. 2015) (quoting Restatement (Second) 

of Torts § 541 (Am. Law. Inst. 1977)). “Moreover, ‘a person may not justifiably 

rely on a representation if there are “red flags” indicating such reliance is 

unwarranted.’” Grant Thornton LLP v. Prospect High Income Fund, 314 

S.W.3d 913, 923 (Tex. 2010) (quoting Lewis v. Bank of Am. NA, 343 F.3d 540, 

546 (5th Cir. 2003)). 

On appeal, Jacked Up identifies several misrepresentations by Sara Lee. 

As the district court found, some of these representations were clearly 

contradicted by the licensing agreement itself. Sara Lee’s representation that 

Jacked Up would recoup its development costs several times over was 

contradicted by the fact that the licensing agreement merely set out royalty 

rates based on net sales. Similarly, Sara Lee’s representation that it would not 

terminate the contract was contradicted by the numerous termination 

provisions in the contract. Jacked Up could not justifiably rely on these “oral 

misrepresentations regarding the contract’s unambiguous terms.” Westergren, 

453 S.W.3d at 424. 

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Jacked Up’s strongest argument for fraud and fraudulent inducement is 

based on Sara Lee’s alleged representations that it was not planning to sell its 

beverage division. Jacked Up claims it continued to develop products as well 

as negotiated and signed the licensing agreement in reliance on these 

representations. The district court found that Jacked Up’s reliance on these 

representations was unjustifiable because of another representation that Sara 

Lee made: that Sara Lee wanted to add the change-of-control termination 

provision at Section 14(c) “in the event North American Beverage is purchased 

by a third party company.” 

Jacked Up surely knew that Sara Lee might sell its beverage division in 

the future. But this fact does not make Sara Lee’s other representation—that 

it was not currently planning to sell the company—obviously false. See 

Westergren, 453 S.W.3d at 424. 

Whether Sara Lee’s explanation for why it wanted a change-of-control 

termination provision constituted a “red flag” is a closer question. Sara Lee 

cites several cases where reliance was unjustifiable based on some sort of red 

flag. In Grant Thorton, the Texas Supreme Court held that reliance on a 

company’s audit reports to purchase the company’s bonds was unjustifiable 

after the plaintiff learned that the company “had lost its primary source of 

funding.” 314 S.W.3d at 923. This fact was a red flag that contradicted the 

rosier picture painted by the earlier audit reports. Id. In Lewis, this Court 

examined the plaintiff’s reliance on an oral representation by the defendant 

about the tax consequences of a transaction. 343 F.3d at 546–47. Documents 

prepared by the defendant in Lewis did not mention the tax consequences of 

the transaction or characterize the instruments at issue as tax-deferred. Id. at 

547. This Court held that these documents were “a red flag warranting further 

investigation of the tax consequences of the loan transaction.” Id. In Skelton v. 

Urban Trust Bank, 516 B.R. 396 (N.D. Tex. 2014), a district court addressed 

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whether a plaintiff justifiably relied on the defendant’s representation that it 

possessed a promissory note. The plaintiff in that case was aware of an 

affidavit executed by the defendant which indicated that the note was lost. Id.

at 398. The court found that this lost note affidavit was a red flag that rendered 

reliance unjustifiable. Id. at 406.

Sara Lee’s explanation for why it wanted a change-of-control termination 

provision was not as much of a red flag as the defendants’ actions in Grant 

Thorton, Lewis, and Skelton. Merely suggesting the possibility of selling the 

beverage division did not “serve as a warning,” In re Mercer, 246 F.3d 391, 418 

(5th Cir. 2001) (quoting William Prosser, Law of Torts § 108 (4th ed. 1971)), 

that Sara Lee was actively planning a sale. Even if it were such a warning, 

Jacked Up could not have learned the truth with reasonable investigation. 

Schmitz did the only thing he could to investigate—he asked Sara Lee 

executives whether they currently planned to sell the company. Sara Lee does 

not suggest that Jacked Up could have learned of the sale in some other way. 

Indeed, the sale was not made public until late October. 

A more comparable case is In re Whittington, 530 B.R. 360 (Bankr. W.D. 

Tex. 2014). There, the plaintiff was confronted with a red flag—“a partially 

redacted contract with numbers that did not quite add up.” Id. at 385. The 

plaintiff asked the defendant “whether he was making side profits on the deal”; 

the defendant “lied in response.” Id. The court found that there was nothing

obvious about this lie “that should have triggered further inquiry, nor was 

there any reason” to distrust the defendant. Id. Likewise, in this case there 

was nothing obviously false about Sara Lee’s representation that it was not 

planning to sell its beverage division, nor did Jacked Up have any reason to 

distrust Sara Lee. 

At the very least, there is a genuine dispute of fact as to whether Jacked 

Up’s reliance on Sara Lee’s representations was justifiable. Therefore, we 

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reverse the district court’s grant of summary judgment in favor of Sara Lee on 

the fraud and fraudulent inducement claims. 

B. Claims Against Smucker 

1. Tortious Interference with a Contract 

The district court granted summary judgment in favor of Smucker on 

Jacked Up’s tortious interference claim on the ground that Sara Lee did not 

breach the licensing agreement.11 Jacked Up argues on appeal that genuine 

issues of material fact preclude summary judgment on its tortious interference 

claim. In response, Smucker first argues that no evidence supports a finding 

that Smucker caused Sara Lee to breach the contract. Second, Smucker argues 

that its actions were privileged under Illinois law.

As an initial matter, Jacked Up applies Texas law while Smucker applies 

Illinois law to the tortious interference claim. The district court applied Texas 

law but did not conduct a choice of law analysis. Although Texas and Illinois 

laws are slightly different in this context, the difference is not material. 

Accordingly, no choice of law analysis is necessary. See Schneider Nat’l Transp. 

v. Ford Motor Co., 280 F.3d 532, 536 (5th Cir. 2002) (“If the laws of the states 

do not conflict, then no choice-of-law analysis is necessary.” (quoting W.R. 

Grace & Co. v. Cont’l Cas. Co., 896 F.2d 865, 874 (5th Cir. 1990))). 

Under Illinois law, a tortious interference claim has the following 

elements: “(1) there was an enforceable contract; (2) the defendant was aware 

of that contract; (3) the defendant intentionally and unjustifiably induced a 

breach of the contract; (4) breach resulted from the defendant’s wrongful 

conduct; and (5) the plaintiff has been damaged.” Marathon Fin. Ins. v. Ford 

Motor Co., 591 F.3d 458, 466 (5th Cir. 2009) (citing Smock v. Nolan, 361 F.3d 

367, 372 (7th Cir. 2004)). Illinois “[c]ourts will recognize a privilege in 

 

11 Because we find that there is a genuine dispute as to whether Sara Lee breached 

the agreement, we cannot affirm the district court on this ground.

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intentional interference with contract cases where the defendant was acting to 

protect an interest which the law deems to be of equal or greater value than 

the plaintiff’s contractual rights.”12 HPI Health Care Servs., Inc. v. Mt. Vernon 

Hosp., Inc., 545 N.E.2d 672, 677 (Ill. 1989). If a defendant’s conduct is 

privileged under Illinois law, then “it is the plaintiff’s burden to plead and 

prove that the defendant’s conduct was unjustified or malicious.” Williams v. 

Shell Oil Co., 18 F.3d 396, 402–03 (7th Cir. 1994). 

Similarly, Texas law requires “(1) an existing contract subject to 

interference [and] (2) a willful and intentional act of interference with the 

contract[] (3) that proximately caused the plaintiff’s injury[] and (4) caused 

actual damages or loss.” Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 

29 S.W.3d 74, 77 (Tex. 2000). Privilege or justification is a complete defense to 

liability. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 689–90 (Tex. 1989)

(noting that “[t]he party asserting this privilege does not deny the interference 

but rather seeks to avoid liability based upon a claimed interest that is being 

impaired or destroyed by the plaintiff’s contract”). “A party is privileged” under 

Texas law “to interfere with the contractual relations of another if: (1) it acts 

in the bona fide exercise of its own rights, or (2) the interfering party has an 

equal or superior right in the subject matter to that of the party to the 

contract.” Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 857 (Tex. App.—

Houston [14th Dist.] 2001, pet. denied) (citing Prudential Ins., 29 S.W.3d at

80). 

Jacked Up essentially points to two acts of interference by Smucker. 

First, Smucker requested that Sara Lee terminate the licensing agreement. If 

 

12 Illinois courts sometimes use this same language to determine whether the 

defendant’s interference was justified as part of the prima facie case for tortious interference. 

See Nation v. Am. Capital, Ltd., 682 F.3d 648, 651 n.2 (7th Cir. 2012) (explaining this 

confusion); Roy v. Coyne, 630 N.E.2d 1024, 1035 (Ill. App. Ct. 1994) (quoting this language in 

the context of justifiability).

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this were true, then Jacked Up would seem to have a strong prima facie claim 

of tortious interference under either Illinois or Texas law. In support of this act 

of interference, Jacked Up points to Schmitz’s declaration, which states that 

around October 21, 2011, Sara Lee’s Greg Immell told him on a telephone call 

that Sara Lee was “terminating the License Agreement immediately at 

Smuckers’ request.” Smucker’s instruction to Sara Lee would be admissible as 

an opposing party’s statement. See Fed. R. Evid. 801(d)(2)(D) (a statement is 

not hearsay if “offered against an opposing party and . . . made by the party’s 

agent or employee on a matter within the scope of that relationship and while 

it existed”). But Immell himself was not an employee of Smucker at that time; 

thus, his statement relaying Smucker’s instruction appears to be hearsay not 

subject to any exception. See Fed. R. Evid. 805 (hearsay within hearsay is only 

admissible “if each part of the combined statements conforms with an 

exception to the rule”). Moreover, Jacked Up offers no “equivalent 

circumstantial guarantees of trustworthiness” to introduce this statement 

under the residual exception to the hearsay rule. Fed. R. Evid. 807(a)(1). 

Accordingly, Schmitz’s declaration is inadmissible against Smucker to show 

that Smucker intentionally caused Sara Lee to terminate the contract. 

Second, Jacked Up argues that Smucker induced Sara Lee to terminate 

the contract by opting not to assume the licensing agreement when it 

purchased Sara Lee’s beverage division. Smucker argues that its decision was 

justified. Specifically, Smucker’s corporate deponent explained that Jacked 

Up’s brand was not a good fit with Smucker’s “family-friendly, family-oriented” 

image. In an email dated October 28, 2011, a Smucker vice president also 

explained that Smucker did not “want this contract as a means to enter the 

energy drink business. We will have our hands full successfully integrating the 

new [Sara Lee] businesses into our portfolio.” This evidence supports a finding 

that Smucker made its decision “based on business considerations,” Marathon 

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Fin. Ins., 591 F.3d at 468 (applying Illinois law), “in the bona fide exercise of 

its own rights,” Baty, 63 S.W.3d at 857 (applying Texas law).

Jacked Up cites no Illinois or Texas case where a defendant unjustifiably 

interfered with a plaintiff’s contract merely by purchasing some of a thirdparty’s assets and declining to assume the third party’s contract with the 

plaintiff. To the contrary, a defendant in Smucker’s position would ordinarily 

be justified in assuming some contracts but not others as part of an asset 

purchase. Indeed, one court has found that in the context of a tortious 

interference claim, Texas law affords a privilege to a party purchasing assets 

from a corporation. C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 791–

92 (Tex. App.—Houston [1st Dist.] 2004, no pet.). Because no evidence or case 

law supports the finding that Smucker’s actions were unjustified, we affirm

summary judgment in favor of Smucker on the tortious interference claim. 

2. Trade Secret Misappropriation 

The district court held that the Ohio Uniform Trade Secrets Act 

(“UTSA”), Ohio Rev. Code § 1333.61–.69, preempts Jacked Up’s common law 

trade secret claim, and denied Jacked Up’s Rule 56(d) request for a 

continuance. On appeal, Jacked Up argues that Texas law applies and that the 

district court abused its discretion by denying its Rule 56(d) request. Smucker 

defends the district court’s decision and also argues that Jacked Up has failed 

to put forth sufficient evidence in support of a trade secret claim. 

The district court conducted an extensive choice of law analysis and 

found that Ohio law governs this claim. Courts “apply the law of the forum

state to determine which state’s law applies.” Mumblow v. Monroe Broad., Inc., 

401 F.3d 616, 620 (5th Cir. 2005). Under the “most significant relationship” 

test used by Texas courts, 

The factors to consider in determining the applicable law for a tort 

case such as this are (1) the place where the injury occurred; (2) the 

place where the conduct causing the injury occurred; (3) the 

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residence, nationality, and place of business of the parties; and 

(4) the place where the relationship, if any, between the parties is 

centered. 

In re ENSCO Offshore Int’l Co., 311 S.W.3d 921, 928 (Tex. 2010) (citing 

Restatement (Second) of Conflict of Laws § 145 (Am. Law. Inst. 1971)). In trade 

secret misappropriation cases, “the place of injury does not play so important 

a role”; “[i]nstead, the principal location of the defendant’s conduct is the 

contact that will usually be given the greatest weight.” Restatement (Second) 

of Conflict of Laws § 145 cmt. f. Thus, in this case, the fact that Smucker 

allegedly misappropriated a trade secret in Ohio is more important than the 

fact that Jacked Up suffered its injury in Texas. The third factor weighs 

equally in favor of Texas and Ohio law because Jacked Up is a Texas citizen 

and Smucker is an Ohio citizen. The fourth factor is not particularly applicable 

because Jacked Up and Smucker never had any formal relationship. On 

balance, we agree with the district court that Ohio has the most significant 

contacts with this claim and that no countervailing policy considerations weigh 

against this conclusion. Therefore, we apply Ohio law to Jacked Up’s trade 

secret claim. 

Ohio’s UTSA provides a remedy for “misappropriation.” Ohio Rev. Code 

§ 1333.63. Misappropriation is defined, among other things, as “[a]cquisition 

of a trade secret of another by a person who knows or has reason to know that 

the trade secret was acquired by improper means,” Ohio Rev. Code 

§ 1333.61(B)(1), or “use of a trade secret of another without the express or 

implied consent of the other person by a person who . . . [u]sed improper means 

to acquire knowledge of the trade secret,” Ohio Rev. Code § 1333.61(B)(2). 

Jacked Up fails to put forth evidence showing that Smucker has acquired 

or used any trade secret. The core of Jacked Up’s trade secret claim is that 

Smucker is using Jacked Up’s formulas for its Pickwick- and Infusia-brand iced 

teas. Smucker contends that its four iced tea flavors were developed by Sara 

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Lee and mixed by Beverage House, Inc. (“Beverage House”) before Sara Lee 

came into contact with Jacked Up. The record supports Smucker’s account. For 

example, a declaration by a Beverage House representative states that 

Beverage House mixes the same iced tea flavors and the same energy 

component (XR16817000) for Smucker as it did for Sara Lee in 2010. This 

energy component differs from the one developed by Jacked Up. Additionally, 

a recent production batch sheet shows that Beverage House continues to use 

the XR16817000 energy component in the Raspberry Infusia Iced Tea. 

Recognizing that it lacks evidence in support of its trade secret claim, 

Jacked Up seeks additional time for discovery under Rule 56(d). Rule 56(d) 

allows a court to deny a summary judgment motion and extend discovery if the 

party opposing summary judgment “shows by affidavit or declaration that, for 

specified reasons, it cannot present facts essential to justify its opposition.” 

Fed. R. Civ. P. 56(d). “While Rule 56(d) motions for additional discovery are 

broadly favored and should be liberally granted, the party filing the motion 

must demonstrate how additional discovery will create a genuine issue of 

material fact.” Smith v. Reg’l Transit Auth., 827 F.3d 412, 422–23 (5th Cir. 

2016) (citations and internal quotation marks omitted). In particular, the party 

opposing summary judgment “must ‘set forth a plausible basis for believing 

that specified facts, susceptible of collection within a reasonable time frame, 

probably exist and indicate how the emergent facts, if adduced, will influence 

the outcome of the pending summary judgment motion.’” Biles, 714 F.3d at 894 

(quoting Raby v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010)). That party 

must also have “diligently pursued discovery.” McKay v. Novartis Pharm. 

Corp., 751 F.3d 694, 700 (5th Cir. 2014) (quoting Beattie v. Madison Cty. Sch. 

Dist., 254 F.3d 595, 606 (5th Cir. 2001)). 

The district court found that Jacked Up failed to submit an affidavit in 

support of its Rule 56(d) motion and failed to show that it diligently pursued 

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discovery. On appeal, Jacked Up argues that it needs “documents regarding 

the formulas [Smucker] is using for its new energy tea.” But the record already 

reflects that Smucker is using formulas developed by Sara Lee in 2010. 

Additionally, Jacked Up does not show that it diligently pursued discovery. 

Jacked Up did not move to compel production of these documents during the 

discovery period—the first time it sought judicial assistance in obtaining these 

documents was in response to Smucker’s summary judgment motion. Under 

these circumstances, the district court did not abuse its discretion by denying 

Jacked Up’s Rule 56(d) motion for a continuance. Cf. Beattie, 254 F.3d at 606 

(affirming denial of Rule 56(d) motion where plaintiff failed to depose certain 

defendants during discovery period). 

Because Jacked Up has failed to put forth evidence showing that 

Smucker acquired or used any trade secret, we affirm the district court’s grant 

of summary judgment in favor of Smucker on the trade secret misappropriation 

claim. Additionally, we affirm the district court’s denial of Jacked Up’s Rule 

56(d) motion for a continuance. 

C. Whether Jacked Up Can Prove Damages 

Finally, Sara Lee and Smucker urge the Court to affirm summary 

judgment on an alternative ground: that Jacked Up’s evidence of lost profits is 

speculative.13 Jacked Up’s evidence of lost profits—an expert report prepared 

by EJ Janik (“Janik Report”)—is critical to its claim for damages. Indeed, this 

expert report is the only evidence of damages in the record.14 

 

13 Although the defendants presented this argument below, the district court disposed 

of each claim on other grounds and did not address whether Jacked Up can prove damages. 

We may affirm summary judgment on this ground even though the district court did not 

address it. See Culbertson v. Lykos, 790 F.3d 608, 627 (5th Cir. 2015).

14 Jacked Up likely could have claimed reliance damages. See, e.g., Restatement 

(Second) of Contracts § 349 (Am. Law. Inst. 1981) (“As an alternative to [expectation 

damages], the injured party has a right to damages based on his reliance interest, including 

expenditures made in preparation for performance or in performance, less any loss that the 

party in breach can prove with reasonable certainty the injured party would have suffered 

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Sara Lee and Smucker principally argue that Illinois law bars recovery 

of lost profits by new businesses. Generally, Illinois “courts consider evidence 

of lost profits in a new business too speculative to sustain the burden of proof.” 

Tri-G, Inc. v. Burke, Bosselman & Weaver, 856 N.E.2d 389, 407 (Ill. 2006). This 

“new business rule” also applies “to new product lines in established businesses 

when profits are difficult to measure.” TAS Distrib. Co. v. Cummins Engine 

Co., 491 F.3d 625, 633 (7th Cir. 2007). Texas courts apply a similar rule. See 

Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 

(Tex. 1994) (“Profits which are largely speculative, as from an activity 

dependent on uncertain or changing market conditions, or on chancy business 

opportunities, or on promotion of untested products or entry into unknown or 

unviable markets, or on the success of a new and unproven enterprise, cannot 

be recovered.”). This rule is not ironclad, however. See, e.g., Tri-G, 856 N.E.2d 

at 407–08 (upholding jury’s award of new business’s lost profits based on 

comparable profits made by an established business). Indeed, the new business 

rule is simply an extension of the general rule that lost profits are only 

“recoverable if proved to a reasonable degree of certainty.” TAS Distrib., 491 

F.3d at 632; accord Phillips v. Carlton Energy Grp., LLC, 475 S.W.3d 265, 278 

(Tex. 2015) (“[L]ost profits can be recovered only when the amount is proved 

with reasonable certainty.”). 

The Janik Report calculates lost profits by projecting future sales of 

Jacked Up products. These sales figures assume that a certain number of 

stores would buy Jacked Up tea, coffee, and cappuccino each year and that each 

store would buy a certain number of cases of Jacked Up products. The Janik 

Report pulls these assumptions from Sara Lee’s own internal projections. 

 

had the contract been performed.”). Although counsel for Jacked Up stated at oral argument 

that Jacked Up does have reliance damages, such damages are not substantiated in the 

record or explained in Jacked Up’s briefs.

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Jacked Up neither explains why these numbers are reasonably certain nor 

points to any evidence in the record substantiating them—perhaps partly 

because Sara Lee had no contracts with convenience stores to provide Jacked 

Up products by the time it terminated the licensing agreement, although 7-

Eleven did pursue such a contract. 

We leave it to the district court to determine whether Jacked Up has put 

forth sufficient evidence of damages. The district court may choose to conduct 

a Daubert inquiry to determine whether the Janik Report is admissible. See

Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 590 (1993) (suggesting that 

Federal Rule of Evidence 702 demands “more than subjective belief or 

unsupported speculation”); see also Sportsband Network Recovery Fund, Inc. v. 

PGA Tour, Inc., 136 F.3d 1329 (5th Cir. 1998) (unpublished table decision) 

(affirming district court’s application of both Daubert and Texas state law to a 

lost profits claim). Indeed, Sara Lee and Smucker moved to exclude the Janik 

Report, and this motion was still pending when the district court granted 

summary judgment. We leave it to the district court to determine whether the 

Janik Report is admissible, and if it is admissible, whether it establishes lost 

profits with reasonable certainty. 

IV. CONCLUSION 

For the foregoing reasons, we AFFIRM in part, REVERSE in part, and

REMAND for further proceedings. 

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